One of the best features of forex trading is the fact that you can buy and sell foreign currencies for 24 hours and 5+ days plus each week. However, it pays to look at historical price data on forex charts to see what time of the day you should be keeping an eye on the market and what times you should be out doing something entirely different. That said, your aim should be to trade when the average trading range is worth your while; and stay out of the market when price is in a narrow sideways range.
The foreign exchange market opens at 8am on Monday morning in Wellington, New Zealand. That is, 8:00pm GMT, 9:00pm BST, and 4:00pm EDT (Sunday evening in New York City – NY time). The market closes for the week at 4pm EDT on Friday in New York which is obviously the last place it opened for the week. This statement means, when the market closes in one end of the world (New Zealand for example) it is opening its doors for business on another part of the world (say New York City). And since these forex trading hours overlap, currencies are being traded continuously, 24 hours throughout the week for 5+ days. In other words, foreign exchange trading practically never stops.
However, some traders, especially those new to the business, tend to think that since the market is open 24 hours a day, they can just get in and start trading whenever they choose during the day. Although this is equally true, there is somewhat a need to clarify it. Indeed when it comes to forex trading hours, some hours are better than the others in that they present much better opportunity to make profits than the others. So what are the most suitable forex trading hours and why?
Most often than not, the best time to get into the foreign exchange trading market is when large volumes of currencies are being traded. At those times/ hours, as a trader, you can take full advantage of forex benefits. This means, the best time to enter the market is when several countries are trading at the same time; that is, trade when forex market hours in different countries overlap. Those hours are usually the time when the forex market is the most active and has thus the largest volume of trades and the biggest pip movements. It is when currencies are the most active that traders have a better chance of making some profit. Slow markets offer little chances of profit and therefore, forex traders usually stay out of them. When do forex trading times overlap?
Example of these overlap times are:
New York and London: from 8 am to 12 am (EST)
Sydney and Tokyo: from 7 pm to 2 am
London and Tokyo markets overlap one hour, from 3 am to 4 am.